How Many Buy-to-Let Mortgages Can I Have?

If you have an unused property, your first thought would be to rent it out for extra income. 

As buying a property is a big task and involves a considerable investment, both monetary and otherwise, most people look to secure a buy-to-let mortgage.

Buy-to-let mortgages are ideal for people who have no intention of living in the property and want to avoid a residential mortgage.

However, many landlords often wonder, “how many buy-to-let mortgages can I have?” 

In most cases, you can take out as many buy-to-let mortgages as you want, provided your current financial situation is stable and the lender doesn’t impose restrictions.

But you should know that buy-to-let mortgages have high risk and higher interest rates, although you can take out multiple mortgages. To know about the eligibility criteria, taxes, and other information, read our guide.

What Are Buy-To-Let Mortgages?

Buy-to-let (BTL) mortgages are a type of loan specifically designed for landlords who want to purchase property to rent it out.

The rules and regulations for these mortgages differ from those for residential mortgages, so it’s important to understand the differences before you apply.

Who Is Eligible For A Buy-To-Let Mortgage?

Usually, people who want to rent their property can get a buy-to-let mortgage. But you may have to meet certain conditions to be eligible for one because lenders often consider such mortgages high risk.

At times lenders make it a point that you should own your home, either with a mortgage or outright. Moreover, having a good credit score is important while ensuring that your borrowings are not stretched.

In some cases, it’s essential to provide proof of income of at least £25,000, or it could be challenging to get a buy-to-let mortgage.

What Are Certain Criteria For A Buy-To-Let Mortgage?

We have seen that lenders have a maximum age limit of 75 years, but the age requirement can be lower depending on the lender and in some cases the lender may have no maximum age restriction at all.

Now, the amount a person can borrow depends in most cases on the monthly rent they are getting or are likely to get.

Plus, you must typically have a Loan-To-Value ratio (LTV) of at least 75% and a 25% minimum deposit to qualify for the buy-to-let mortgage.

The bottom line is income from rent has to cover 125% of mortgage repayments.

To learn more about this, read our guides on 80% LTV and 90% LTV buy-to-let mortgages.

How Many Buy-To-Let Mortgages Can I Have? 

You can have unlimited buy-to-let mortgages, with many landlords having multiple mortgages and large property portfolios. But that’s not to say your current lender and financial situation don’t have any influence. 

Because of the higher risk, it’s not uncommon for lenders to limit the number of buy-to-let mortgages you can take out.

Moreover, first-time buyers hardly have any chance of acceptance, and only people with relevant experience and reliability can get one.

On average, lenders establish a limit of 2-5 mortgages for every landlord, although no rule prevents you from taking out more, provided you can clear the repayments.

How Do Buy-To-Let Mortgages Work?

If you need clarification about how buy-to-let mortgages differ from ordinary mortgages, check out the following points.

• Higher interest rate
• Higher fees
• The minimum deposit varies between 20-40% of the property’s value

More often than not, these are interest-only mortgages, so you will have to pay the interest monthly instead of the capital amount.

However, buy-to-let mortgages are available on a repayment basis, so you can pay back the total loan amount when the mortgage ends.

But most buy-to-let mortgage lending doesn’t fall under the ambit of the Financial Conduct Authority (FCA).

However, there are certain exceptions, like when you rent the property to your spouse, child, sibling, or any other family member.

In such instances, they are called consumer buy-to-let mortgages and have the same strict rules as residential mortgages.

Even though the FCA doesn’t regulate all buy to let lending, it advises, administers, and arranges buy-to-let consumer mortgages by following the laws governing residential mortgages.

How Much Can You Borrow From Buy-To-Let Mortgages?

The rental income you will likely receive determines the amount you can borrow from buy-to-let mortgages.

Once the lender is assured that the rental income can cover the mortgage payments while leaving a bit extra, your buy-to-let mortgages will be approved.

Compared to the mortgage repayment, the rental income must be 25-30% higher. But when the property’s rental valuation isn’t high enough, you must make a larger deposit.

If possible, contact a professional mortgage adviser to secure the best deal.

What Are Some Taxes On Buy-To-Let Mortgages?

Here are a few of the taxes you must know about when opting for a buy-to-let mortgage.

Disclaimer: When it comes to taxes, this is just general advice and not to be relied upon as fact. When it comes to tax everyone’s position and circumstances are different and the rules are changing all the time. Only by seeking advice of a qualified tax professional can you be certain you are complying with all the relevant tax rules & regulations.

1. Capital Gains Tax (CGT)

For basic rate taxpayers, second buy-to-let properties are charged 18% CGT tax, while it is 28% for higher rate taxpayers. If you have other assets, CGT will be imposed at 10%, and the higher rate will be 20%. 

After selling the property at a profit, you must pay CGT when the gain crosses £6,000. And all profits must be declared to the HMRC, following which the due tax must be repaid within 30 days.

Read further: Capital Gains Tax on Buy-To-Let Properties

2. Income Tax

The money you get from rent is treated as income and is taxable under the Income Tax rules. Every person must declare this as part of their Self Assessment tax return for that financial year.

In the UK, the tax rate might be 20%, and you will only have to pay Income Tax on rent if the total income is more than your allowance at the relevant income tax threshold category that you fall in.

3. Mortgage Interest Tax Relief

To reduce their payable tax, landlords could deduct mortgage interest from their rental income. But that’s no longer possible, and you might have to pay more tax than before.

Must Read: Can I Live In My Buy-To-Let Property?

Disclaimer: When it comes to taxes, this is just general advice and not to be relied upon as fact. When it comes to tax everyone’s position and circumstances are different and the rules are changing all the time. Only by seeking advice of a qualified tax professional can you be certain you are complying with all the relevant tax rules & regulations.

Frequently Asked Questions

1. How many rental properties can you own in the UK?

In the UK, there’s no limit to the number of rental properties you can own. Your ability to purchase is typically only constrained by your financial resources or any conditions set by your mortgage provider.

2. How many times can you mortgage a property?

You can remortgage a property as many times as you wish. However, it’s generally more challenging to secure mortgages for multiple properties.

3. What is the average profit from rental properties in the UK?

As of latest 2023 data, the average rental yield from rental properties in UK is 4.75% with an average monthly rent being £969. (Source)

Conclusion 

To qualify for a buy-to-let mortgage, you must pass a series of checks whereby your entire portfolio and total borrowing are evaluated.

It also depends on how you manage existing properties, forecast future cash flow and create credit report checks.

For people who don’t have a portfolio, they must provide information on expected rental income, current property and credit score.

If all goes well, you can take out as many buy-to-let mortgages as you want, provided the lenders don’t set a limit of 5-10 mortgages.

**A buy to let mortgage will be secured against your property.

Some types of buy to let mortgages are not regulated by the Financial Conduct Authority.

All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.